Which of the Following Propositions Is Not True of Preference

question 59

Multiple Choice

Which of the following propositions is not true of preference shares?

• A)They entitle holders to a pro rata share of any surplus assets on winding up.
• B)They entitle holders to repayment on winding up in preference to ordinary shareholders.
• C)They entitle holders to dividends at a fixed rate if and when dividends are declared.
• D)They do not generally come with voting rights.

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Definitions:

Coupon Rate

The annual interest rate paid by a bond relative to its face value, expressed as a percentage.

Duration-based Immunization

A strategy used in portfolio management to minimize the risk of interest rate fluctuations by matching the duration of assets and liabilities.

Rebalanced

The process of realigning the weightings of a portfolio of assets to maintain an original or desired level of asset allocation or risk.

Modified Duration

A measure of the price sensitivity of a bond or other debt instrument to an interest rate change, factoring in the changing cash flow timings.